KRA’s Sh623 million Sonko tax claim: Breaking down assessment, interest and bank notice

In a notice dated October 12, 2026, the Kenya Revenue Authority appointed First Community Bank as an agent for tax recovery, directing it to pay over funds held on Sonko’s behalf, or money owed to him, towards the tax liability.

The notice specifies a total of Sh623,389,105.

That sum comprises approximately Sh308.92 million in principal tax, Sh15.76 million in penalties and Sh298.72 million in interest.

KRA also directed the bank to submit details of any funds it held for Sonko.

The notice invokes Section 42 of the Tax Procedures Act, which permits the authority to recover tax through a third party holding or owing money to the taxpayer.

The notice is a collection measure; it does not mean First Community Bank has itself been accused of owing Sonko’s tax debt.

Its obligation is to comply with the lawful direction regarding funds it holds or owes, up to the specified amount.

The bank deposits behind the dispute

The tax dispute dates back to KRA’s review of deposits into 11 bank accounts held by Sonko between 2013 and 2019.

The accounts were held at Equity Bank, KCB, Diamond Trust Bank and Co-operative Bank, including accounts denominated in foreign currencies.

KRA identified net deposits of about Sh1.4 billion and questioned whether the funds had been declared as taxable income.

Sonko disputed that interpretation, arguing that the deposits included business transactions, loans and proceeds from property sales, rather than undeclared income.

The authority said it excluded loans, reversals, contra-entries, bounced cheques and income already taxed elsewhere before calculating the taxable amount.

It assessed net taxable income of approximately Sh1.28 billion and calculated an income tax liability of about Sh386 million.

In June 2022, the Commissioner of Domestic Taxes issued additional assessments totalling Sh407.4 million.

KRA subsequently allowed Sonko to lodge a late objection, and on December 13, 2024, issued an objection decision partly confirming the assessment at about Sh385 million.

The tribunal rejected Sonko’s appeal

Sonko appealed to the Tax Appeals Tribunal in January 2025, challenging how KRA treated his bank deposits, expenses and business purchases.

In a judgment dated August 7, 2026, the tribunal dismissed his appeal, finding that he had not provided adequate records to rebut the assessment.

It also noted that he had been given additional time to file documents and supplementary submissions but did not meet the deadlines.

Sonko has maintained that he possesses records that would explain the transactions and said he intended to challenge the tribunal’s decision in the High Court.

The current agency notice seeks Sh623.39 million and gives its own breakdown of principal tax, penalties and interest.

Published reports have not fully reconciled that total with the earlier KSh385 million objection decision.

The precise calculation and any further challenge would need to be confirmed from KRA’s full tax records and subsequent court filings.

How the money can be recovered

Under Section 42, KRA can direct a bank or another person holding money for a taxpayer, or owing money to the taxpayer, to remit a specified amount towards unpaid tax, subject to the conditions set out in the law.

The bank is required to pay the amount covered by the notice when the relevant money is held or becomes due.

If it lacks sufficient funds to comply, the law requires it to notify KRA in writing within the prescribed period, explaining why it cannot pay.

A person appointed as an agent who fails to comply without reasonable cause can become personally liable for the amount specified in the notice.

The next legal question

The notice does not establish how much money First Community Bank actually holds for Sonko or whether it will recover the full sum.

If the account balance is lower than the amount demanded, the notice cannot by itself produce the shortfall; KRA may need to pursue other lawful recovery routes.

The underlying tax dispute and the recovery procedure are separate matters.

Sonko’s earlier challenge was decided by the Tax Appeals Tribunal, while the current notice directs a third party to help collect the amount KRA says remains unpaid.

For taxpayers, the case illustrates how an assessment can move from investigation to objection, appeal and enforcement when the tax authority’s demand remains unpaid.